Martha Stewart Looks to Complete Comeback

Nov. 18, 2009

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But tears are not shed often or easily, despite tough times. Like most media companies, Stewart's has been hard hit by the nation's economic woes. But the economic hit that Martha Stewart Living Omnimedia has taken in the recession is only the second daunting obstacle Stewart has faced in the past five years. You may have heard of the first.

Her high-profile trial and eventual imprisonment for lying under oath was hard to miss. At the time, she was adamant it wouldn't destroy her, declaring on the court house steps, "I'll be back." But in the wake of what she refers to as her "legal mess," the company's losses topped $59 million in 2004 and a whopping $75 million the next year.

'I Was Pissed'

Did she ever think there was a danger that her company would go under?

"Not really," she said, "'cause I'm an optimist. I knew we had a really good thing going. And I really knew that I was not guilty of anything that could possibly harm my company."

But wasn't she scared, after all the hard work she had put in to create her business empire?

"Well, I was pissed. OK," Stewart said. "Pissed that something could actually affect that. The company had nothing to do with anything. But yet, because I am the face and the brand, my person -- it certainly had a -- harmful effect.

"When you are prosecuted in such a way, and a great portion of wealth is dissipated, all I can think, so much, is what I could've done with all of that for the good of mankind. And -- and I hope I can continue."

Stewart said she couldn't put a precise figure on her personal financial losses but contends they were huge.

"It's inestimable actually. Personally, oh, I'm sure -- probably more than a billion dollars, of course. ... And if you add in what the company was worth -- absolutely. And I'm a major shareholder in the company.

Did she kick herself, just a little bit, we wondered?

"How could I kick myself? There are other people to be kicked," Stewart said, laughing. "Enough. Let's get on with-- with the future."

It's that kind of can-do attitude that has helped her steer the company out of danger. By 2007, with Stewart fully engaged, the company turned a profit for the first time since she'd faced her legal woes. But then the world financial crisis hit. Stewart, however, seems remarkably undaunted by the stalled economy, saying the company is poised for major growth.

In fact the company's offices in an old factory building on Manhattan's West Side -- where all her operations have now been centralized -- pulses with activity. Taking up a full city block, the space is bright, white and abuzz. There's the Martha Stewart retail and design operation, the magazines (four of them), the television editing facilities, the test kitchens and the crafting section, the online operation -- and that's just for starters.

The key to further growth -- the company now has sales in the $200 million range -- lies in selling more products. The company took a serious blow with the end of a lucrative deal with Kmart, which guaranteed tens of millions of dollars in sales annually.

But MSLO has responded by finding a new partner in Home Depot. That deal will begin in January as the Kmart deal ends. The company has also signed a new partnership with PetSmart and will continue to partner with Macy's. MSLO is also about to launch a new line of green cleaning products, and this spring will launch a new line of Martha Stewart brownie and cookie mixes.